We will cover Cost Per Order in this installment of our Mastering the Metrics series.
Cost Per Order measures the cost-effectiveness of advertising by dividing total advertising cost by the number of orders generated. This metric is tied to successful conversions, so it applies more directly to profit than does Cost Per Click (CPC), which measures a marketing function. Ads that have strong clickthrough rates but that fail to result in lots of conversions have an unacceptably high cost per order, which is often indicative of an unconvincing or disappointing product.
Advertising Cost / # of Orders Generated = Cost Per Order
